Brookfield has raised $9bn (£6.5bn) for its flagship real estate fund as it plans to sell $25bn of property over the next five years.
The asset management giant announced “strong” results for Q2, with revenues rising to $2.4bn, up from a $1.5bn loss for Q2 2020.
For the first half of the year it earned $6.2bn, up from last year’s H1 loss of $1.6bn.
In his letter to investors, chief executive Bruce Flatt said that $25bn of capital would be released from its real estate holdings to fuel the next phase of growth for Brookfield.
Brookfield has raised $24bn over the quarter. This includes the $9bn raised for the fourth vintage of its flagship real estate fund. Flatt added that the final fund size is expected to exceed the $15bn of its predecessor, but the target is far higher.
“In the current round of fundraising we are targeting to raise $100bn of capital across our strategies,” he said. “Our goal is to grow each of our flagship funds over time to be in excess of $25bn.”
Nick Goodman, chief financial officer, said he expected the real estate fund “to exceed $30bn” before close.
The results are the first since Brookfield completed its buyout of the outside interests in Brookfield Property Partners earlier this year for about $6.5bn. Flatt said: “We believe we paid our partners a fair price, and the added benefit is the flexibility to manage these assets in the private markets. In total, we now have [around] $30bn of equity invested in commercial real estate.”
He said that only around $16bn of this is invested in 50 or so “irreplaceable” assets. These comprise “a portfolio of high-quality mixed-use office and retail anchored properties in global gateway cities” – mainly New York and London. “On balance we intend to hold these assets for a very long time, if not forever,” Flatt said.
But the remaining $14bn of equity capital is invested in shorter-term opportunistic property investments. “Virtually all of these assets will be monetised opportunistically over the next five to seven years,” Flatt said. “The proceeds will then be available to invest across the entire franchise.”
Flatt said he was confident that rising values would boost returns. “The economic recovery and ensuing real estate recovery will enable us to monetise significant capital from our property investments.”
Brookfield has earned just over $1bn from its real estate portfolio over the past year. Earnings per share rose to $1.26 for the half, from $0.63 last year. The group’s total investment property portfolio rose over the quarter to $101bn from last year’s $97bn.
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